Abstract
Timeline and narrative of the crisis. Potential significance of the episode as a peacetime financial crisis of private credit, close to the beginning of the Industrial Revolution. Important claims about the episode, regarding the Free Banking experience in Scotland, the action of financial contagion, and the Lender of Last Resort (LOLR)-like actions of the Bank of England (BOE). Existing literature dealing with aspects of the episode—no comprehensive coverage exists up to now. Aims of the book: determining whether the run-up to the crisis was a genuine financial bubble, a ‘real’ or ‘pseudo’ crisis, and the presence of contagion and LOLR action in this period. A note on sources.
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- 1.
Morning Chronicle, 29 June 1772.
- 2.
Fordyce had married Margaret Lindsay (1753–1814), the second daughter of James, 5th Earl of Balcarres. A personal letter by her to Fordyce just after his failure survives in Lindsay, Lives of the Lindsays, pp. 336–8n.
- 3.
Fordyce is reported to have spent about £14,000 to win the Colchester seat in 1768. See Jacob M. Price, ‘Fordyce, Alexander (bap. 1729, d. 1789)’, DNB: 9876.
- 4.
The only known surviving likeness of Fordyce (though with what faithfulness to the original can only be guessed at) is a ‘macaroni’ satirical print by Matthew Darly: A (four dice depicted) Macaroni Gambler (2 July 1772, 174 mm × 123 mm, Etching, BM Satires 5016). The pun on Fordyce’s name was common at the time (see, for instance, Walpole, Letters, to Sir Horace Mann, 1 July 1772, pp. 395–6). A ‘Scotch Bill [of Exchange] for £10,000’ can be seen in Fordyce’s left hand, a bag of coins in his right. For ‘macaroni’ prints in general, see Donald, Age of Caricature, pp. 75–108.
- 5.
SM XXXIV (1772), ‘Memoirs of Mr. Fordyce, Banker’; Morning Chronicle, 17 June 1772.
- 6.
For instance, St James’ Chronicle, 10–12 December 1772.
- 7.
Koudijs and Voth, ‘Leverage and beliefs’; Wilson, Anglo-Dutch Finance, pp. 169–88.
- 8.
Bowen, ‘Lord Clive and speculation’ and ‘The Little Parliament’.
- 9.
H. V. Bowen, ‘Colebrooke, Sir George, second baronet (1729–1809)’, rev. Anita McConnell, DNB: 37301, Lucy S. Sutherland, ‘COLEBROOKE, George (1729–1809), of Gatton, Surr.’, Namier and Brooke, History of Parliament, 1754–1790, accessed online at http://www.historyofparliamentonline.org/volume/1754-1790/member/colebrooke-george-1729-1809
- 10.
Morning Chronicle, 19 August 1772; Craftsman or Say’s Weekly Journal, 15 August 1772. The Public Ledger, 22 August 1772, joked that Fordyce must possess a ‘strange power indeed… being almost at the same instant in Holland, Italy, France and England’.
- 11.
Bingley’s London Journal, 5–12 September and 19–26 September 1772; Middlesex Journal, 12–15 September 1772; General Evening Post, 12–15 September 1772; Morning Chronicle, 14 September 1772; SM XXXIV (1772), pp. 473–80 and 529–35.
- 12.
A certificate of conformity was deposited with the Lord Chancellor by Fordyce’s commissioners of bankruptcy on 10 November 1774, releasing him from these more onerous prospects (TNA B 6/5, fo 23). For the rights of, and penalties reserved for, bankrupts in this period, see Carlos, ‘Conformity and the certificate of discharge’ and more generally, Hoppit, Risk and Failure, pp. 29–42.
- 13.
Gentleman’s Magazine LIX (1789), p. 866. Brady, ‘So fast to ruin’, pp. 37–8. Fordyce’s widow remarried in 1812 to Sir James Bland Burges, baronet (NAS GD112/74/25). A letter by Lady Elizabeth Campbell survives (NAS GD 112/74/25/23) in which she comments that ‘after her example [Margaret Fordyce was by then 59] few Ladies need despair of a husband from the fear of being too old.’ Fordyce’s former estate at Roehampton was bought after the crisis by the Gosling banking family, who later extensively rebuilt the house. A drawing of the residence as it appeared around 1800 survives at LMA W.W1/ROE. The current building (Grove House), currently the grounds of the University of Roehampton’s Froebel College, dates from 1792. (http://www.roehampton.ac.uk/Colleges/Froebel-College/).
- 14.
Price, DNB ‘Fordyce’, as above.
- 15.
The date 22 June 1772 was another of those ‘Black weekdays’ that financial markets like to periodically christen—a ‘Black Monday’ in this case. Forbes, Memoirs, p. 41, refers to it as such although he confuses it with the day when Fordyce’s flight became known (the 10th), which was in fact a Wednesday. The editor to the 1860 edition of his book mentions that ‘the author ought to probably have written Black Wednesday,’ but he probably misses the point. Although some houses failed immediately on Fordyce’s absconding, it was only on Monday the 22nd that the bank runs became universal.
- 16.
SM XXXIV (1772), p. 304.
- 17.
On that occasion unsuccessfully. He had to wait until 1776 to finally get elected. See Charles Welch (rev. M. J. Mercer), ‘Hallifax, Sir Thomas (1722–1789), mayor of London’, DNB: 12017.
- 18.
David Hume to Adam Smith, The Correspondence of Adam Smith, Letter 131, 27 June 1772, p. 162.
- 19.
Morning Chronicle, 16 September 1772.
- 20.
Bingley’s London Journal, 4–11 July 1772. An Inquiry into the Late Mercantile Distresses, pp. 195–6.
- 21.
Morning Chronicle, 16 September 1772.
- 22.
Bingley’s London Journal, 4–11 July 1772.
- 23.
Wykes, ‘The Leicester riots of 1773 and 1787’, pp. 40–1.
- 24.
London Evening Post, 7–9 January 1773; London Chronicle, 14–16 January 1773 and 1–3 April 1773; Boase, Banking in Dundee, p. 92; Lythe, ‘The Tayside meal mobs’; Lenman, Integration and Enlightenment, pp. 52–5.
- 25.
Lloyd’s Evening Post, 1–3 February 1773.
- 26.
Hoppit, ‘Financial crises’, p. 51. The proportion he gives for London based bankrupts in 1772 is 52.6%.
- 27.
Watters, Where Iron Runs Like Water; Campbell, Carron Company.
- 28.
SM XXXIV, pp. 304–5, NAS GD224/178/1/9.
- 29.
Checkland, Scottish Banking, pp. 124–35; Hamilton, ‘Ayr Bank’, and Economic History, pp. 317–25; Munn, Provincial Banking Companies, pp. 36–9; Saville, Bank of Scotland, pp. 156–66; Kerr, History of Banking in Scotland, pp. 79–94.
- 30.
BOE Banking Department General Ledger ADM7/20, fos 634, 680, 703 (for loans running in the period spanning 1767–74).
- 31.
London Evening Post, 4–7 July 1772; Middlesex Journal, 20–23 July 1772 and 28–30 January 1773; General Evening Post, 5–7 January 1772 for France, Ireland, Switzerland; Braudel, Civilization and Capitalism, pp. 268–71; Kindleberger, Manias, p. 124, for Russia, Genoa and Sweden. See also Chap. 4, footnote 9.
- 32.
Price, Capital and Credit, pp. 124–39; Sheridan, ‘1772 and the American colonies’.
- 33.
Morning Chronicle, 23 June 1772.
- 34.
Sutherland, East India Company, pp. 222–9; Bowen, Business of Empire, pp. 34–7, 69–73.
- 35.
Colebrooke, Retrospection, pp. 205–13; Sutherland, ‘Sir George Colebrooke’s corner’.
- 36.
General Evening Post, 4–6 May 1773.
- 37.
Lloyd’s Evening Post, 3–5 May 1773; SM XXXV (1773), p. 266.
- 38.
London Chronicle, 13–15 January 1774; Gazetteer and New Daily Advertiser, 18 April 1774; Bibliotheca Colebrookiana, auction catalogue by Christie and Ansell (London, 1777).
- 39.
A commission was instituted against him on 18 January 1777 (TNA B4/21).
- 40.
Bowen, DNB ‘Colebrooke’, as above. Certificates of conformity were awarded to Colebrooke on 1 October 1778 (TNA B6/5, fo 126) and again on 28 June 1781 (TNA B6/5, fo 211), but he did not return to Britain before 1789.
- 41.
‘Joshua Gee’, Bingley’s Journal, 20–27 June 1772. The identical letter appeared in the London Evening Post, 23–25 June 1772, and the Public Advertiser, 25 June 1772.
- 42.
‘Atticus’, Bingley’s Journal, 20–27 June 1772.
- 43.
‘A Lover of Modesty in Prosperity’, On the Late Failure among the Bankers, Morning Chronicle, 14 July 1772. ‘Protesting’ refers to the practice of formally refusing to ‘accept’ a bill of exchange, that is, refusing to support the credit claims of a counterparty. Much more will be said on bills of exchange in Chaps. 2 and 4.
- 44.
Smith, Wealth of Nations, II.ii.57.
- 45.
Hoppit, Risk and Failure, p. 134.
- 46.
For instance, Sheridan, ‘1772 and the American colonies’, Price, Capital and Credit, p. 131, Hoppit, Risk and Failure, p. 99.
- 47.
Devine, ‘The Colonial trades and Industrial investment in Scotland’, Hamilton, Economic History, p. 262.
- 48.
Price, Capital and Credit, p. 124.
- 49.
Kindleberger, Manias, p. 44.
- 50.
SM XXXIV (1772), pp. 304–5, NAS GD224/178/1/9.
- 51.
Smith, Wealth of Nations, II.ii.73–7 is the main source of the incompetence/bad business plan argument. Corruption is the main theme of the 1778 Precipitation report. These are the two main primary sources on which this tradition is based.
- 52.
Kindleberger, as above. The author is fully aware that ‘fanning the flames of a bubble’ is a mixed metaphor.
- 53.
Kindleberger, as above.
- 54.
Wilson, Anglo-Dutch Finance, p. 171.
- 55.
Sir William Forbes, Memoirs of a Banking-House, pp. 39–44; SM XXXIV (1772), p. 311.
- 56.
Examples are too numerous for any list to aspire to comprehensiveness, even when limiting oneself to the Early Modern period. One of the better examples of the popular bubble narrative is that by Chancellor, Devil Take the Hindmost, where he presents crises chronologically from Tulipmania down to the Japanese bubble implosion of the 1980s, although he makes a curious omission of the John Law affair. A recent treatment of John Law’s career in this vein is by Gleeson, The Moneymaker. See also Galbraith, A Short History of Financial Euphoria.
- 57.
Spence, Anecdotes. The supposed quotation is apocryphal.
- 58.
The title of Charles Mackay’s famous 1841 book covering these famous first three bubbles is revealing: ‘Extraordinary Popular Delusions and the Madness of Crowds’ (emphasis added).
- 59.
It is now more or less accepted that the contemporary basis for the traditional Tulipmania account is a single 1630s Dutch pamphlet that appeared after the affair was over. See Goldgar, Tulipmania, pp. 1–7; Garber, Famous First Bubbles; Thompson, ‘Tulipmania, fact or artifact’. For a recent analysis of the numerous ‘Bubble Texts’ written in the immediate aftermath of the 1720 events, see Stratmann, Myths of Speculation.
- 60.
Even Carmen Reinhart and Kenneth Rogoff’s otherwise neutral 2009 analysis of modern banking and sovereign debt crises, This Time is Different, carried a similarly judgemental—not to mention misleading, as they only really covered the post-1800 period—subtitle: ‘Eight Centuries of Financial Folly’ (emphasis added). Similarly emphatically titled accounts specifically of the South Sea Bubble include Cowles, The Great Swindle, and Balen, A Very English Deceit.
- 61.
The best known use of the term is of course that of Keynes, General Theory, pp. 161–2. For a qualitative introduction to behavioural theory as it applies to financial bubbles, see Shiller, Irrational Exuberance, and more generally ‘From Efficient Markets to Behavioral Finance’. Heukelom, Behavioral Economics: A History, provides a good recent review of the development of the discipline.
- 62.
Jevons, ‘Commercial crises and sun-spots’ and ‘Periodicity of commercial crises and its physical explanation’. See also Gorton, ‘Banking panics and business cycles’. The taxonomy of crisis theories is a major subject in itself. A good survey of the state of the crisis debate as it stood at the end of the 1980s can be found in Camerer, ‘Bubbles and Fads’, and more recently in O’Hara, ‘Bubbles: Some perspectives (and loose talk) from history’, Reinhart and Rogoff, This Time is Different, pp. 3–20.
- 63.
Peter Garber is perhaps their best known exponent, at least when it comes to celebrated Early Modern episodes like the Tulipmania, with his Famous First Bubbles and ‘Tulipmania’. Goldgar, Tulipmania, has followed Garber’s lead in re-examining the primary sources of this famous episode and has produced new evidence based on Dutch notarial records, though her work is more a cultural and ideological history rather than an analysis of the financial underpinnings of the affair. For other treatments of the episode, see Posthumus, ‘Tulipmania’; French, ‘The Dutch monetary environment during Tulipmania’. Revision has been equally vigorous when it comes to the South Sea affair—see, for instance Hoppit, ‘Myths of the South Sea Bubble’. A number of works that dispute specific aspects of the traditional South Sea narrative will be referred to in footnotes to follow.
- 64.
Campbell, ‘Myopic rationality’; Shiller, Irrational Exuberance. The debate on the rationality of the South Sea Bubble in particular is extensive and often heated. For example, see Campbell, ‘Myopic rationality in a mania’; Dale et al., ‘Financial markets can go mad’ and ‘Pitfalls in the quest for South Sea rationality’; Shea, ‘Financial market analysis can go mad’.
- 65.
Schwartz, ‘Real and pseudo crises’. For a more recent restatement of her thesis, see Capie, ‘British financial crises in the nineteenth and twentieth centuries’. See also Gorton, ‘Banking panics and business cycles’ for an approach of banking panics that eschews both psychological factors and a strict EMT-inspired crisis denial.
- 66.
The seminal presentation of the EMT near the time of its conception is by Fama, ‘Efficient Capital Markets’ and ‘Efficient Capital Markets II’. EMT proponents often (though not necessarily always) belong to the monetarist tradition dating back to Friedman and Schwartz, A Monetary History of the United States.
- 67.
Neal, Rise of financial capitalism, pp. 77–80. Temin and Voth, ‘Riding the South Sea Bubble’, apply this concept to the Hoare’s Bank trading during the South Sea Bubble. For other ‘rational bubble’ models, see Blanchard and Watson, ‘Bubbles, rational expectations and financial markets’; Abreu and Brunnermeier, ‘Bubbles and crashes’; Selgin, ‘Bank lending “manias” in theory and history’.
- 68.
Pastor and Veronesi, ‘Technological revolutions and stock prices’, propose such a mechanism for technological innovation producing apparent price distortions for new technology sectors. Frehen, ‘New evidence on the first financial bubble’, applies this for 1720-era time series data of Dutch insurance stocks. Garber, Famous First Bubbles, p. 30, argues for a similar pattern being evident in the market for new exotic flowers that explain the Tulipmania without recourse to investor delusion. See also Schubert, ‘Innovations, debts, and bubbles’.
- 69.
Bordo, Eichengreen et al., ‘Is the crisis problem growing more severe?’, p. 55.
- 70.
Minsky, ‘Financial Instability Hypothesis’, pp. 6–8. For other expressions of the hypothesis by Minsky, see ‘An interpretation of Keynes’ and ‘Financial stability revisited’. The origins of Keynesian theory of course are found in Keynes’ own General Theory. More recently, Davidson, ‘Why Have There Been So Many International Financial Market Crises Since the 1970s?’ and Nesvetailova, Fragile Finance, offer good summary reviews of the LPT versus EMT literature and debate. For a typical viewpoint against market fragility coming from the so-called Free Banking tradition, see White, ‘Antifragile banking’.
- 71.
For a recent argument in the Minsky tradition on the necessity of such business models and even the necessity of bubbles, see Janeway, Doing Capitalism, pp. 156–208.
- 72.
Kindleberger, Manias, p. 18. See also Allen and Gale, ‘Bubbles and Crises’ and ‘Optimal financial crises’; Capie, ‘British financial crises in the Nineteenth and Twentieth Centuries’; Janeway, Doing Capitalism, as above; and Abolafia, Making Markets, pp. 82–3, for more recent analyses that share the same rationale.
- 73.
Goodhart, Evolution of Central Banks, p. 50.
- 74.
Minsky, Stabilizing an Unstable Economy, and ‘Money and the Lender of Last Resort’.
- 75.
Kindleberger, Manias, pp. 165–7.
- 76.
Thornton, Paper Credit of Great Britain.
- 77.
Kindleberger, Manias, p. 224.
- 78.
This is another very major subject with a large literature. For an introduction of eighteenth-century attitudes to credit, see Hoppit, ‘Attitudes to credit’; Finn, Character of Credit.
- 79.
‘E.M.’, London Chronicle, 30 June–2 July 1772.
- 80.
Gentleman’s Magazine XLII (1772), p. 505; St James’ Chronicle, 13–15 October 1772; Morning Chronicle, 1 July 1772; London Evening Post, 30 June–2 July 1772.
- 81.
London Chronicle, 30 June–2 July 1772. For Smith’s possible expression of what later became known as the Real Bills Doctrine, see Glasner, ‘Real Bills doctrine and the Law of Reflux’; Mints, History of Banking Theory, pp. 9–30; Rogers, Law of Bills and Notes, pp. 226–37; Perlman, ‘Paternity of the real bills doctrine’.
- 82.
SM XXV (1763), p. 567.
- 83.
E.g. Boase, Century of Banking, pp. 2–3; Morning Chronicle, 26 June 1772; Middlesex Journal, 27–30 June 1772; “A.B.”, London Evening Post, 24–26 June 1772.
- 84.
Morning Chronicle, 1 July 1772.
- 85.
Smith, Wealth of Nations, II.ii.30–6. Smith made a distinction between such foreign outflows serving the consumption of ‘idle people who produce nothing’, which he condemned for promoting ‘prodigality, [and increasing] expense and consumption without increasing production’, and those serving the carrying trade or capital investments which promote home industry, which he approved of.
- 86.
Inquiry on the Late Mercantile Distresses, pp. 6–8.
- 87.
Inquiry on the Late Mercantile Distresses, p. 7.
- 88.
Jennifer Tann, ‘Watt, James (1736–1819)’, DNB: 28880.
- 89.
Neal, ‘Finance of business’, p. 154, from whom the quote originates is a strong proponent of market integration and efficiency. Mathias, Transformation of England, p. 92, on the other hand states that ‘there was no national capital market in eighteenth-century England, in the sense of a coherent, nationally organised entity with flows responding quickly throughout the economy to changes in the supply and demand of funds’. Mirowski, ‘What do markets do?’, also doubts that the eighteenth-century London market for joint shares behaved ‘in a manner suggested by neoclassical theory’.
- 90.
Neal, Rise of Financial Capitalism, p. 229; Neal and Quin, ‘Networks of information’. Sharing and expanding on this concept of a developed financial information network, particularly in the early eighteenth century, are Dale, The First Crash. See also Murphy, Origins of English Financial Markets, for a discussion on early financial markets. Whether markets in this period were in fact so well integrated as to follow the random-walk process that is the cornerstone of modern derivative pricing theory is however more contentious, particularly considering the poor liquidity and difficulty of diversification in this period, caused by the low number and high denomination of tradeable securities. See Chancellor, Devil Take the Hindmost, pp. 92–5 for a typical list of objections. The author is indebted to D’Maris Coffman for stressing the point about the very high denomination of eighteenth-century securities making the application of modern portfolio theory inadvisable. This is not the place for a full review of the literature on random-walk pricing, which dates back to Bachelier, Théorie de la Spéculation, through to Ito, ‘Stochastic Integral’; Black and Scholes, ‘The Pricing of Options and Corporate Liabilities’; and Merton, ‘Option pricing when underlying stock returns are discontinuous’. Hull, Options, Futures and Other Derivatives, and Wilmott et al., The Mathematics of Financial Derivatives, give a good overview of the theory as it has now become standard among market practitioners.
- 91.
Koudijs, ‘Those who know most’.
- 92.
Mirowski, ‘The Rise (and Retreat) of a Market’, p. 577.
- 93.
Braudel, Civilization and Capitalism, p. 271.
- 94.
For the 1825 crisis, see Harris, ‘Repeal of the Bubble act’, Neal, ‘1825 and the restructuring of the British financial system’, and ‘The Bank of England’s first return to gold’.
- 95.
Smith, Wealth of Nations, II.ii.85.
- 96.
Banknote issuance remained free to all entrants on both sides of the Tweed before 1844 , but the practice was much more prevalent in Scotland. See Chap. 2 for more details.
- 97.
Hoppit, ‘Financial crises’, pp. 50–1.
- 98.
Dickson, Financial revolution; Neal, Rise of financial Capitalism.
- 99.
Smith, Lectures on Jurisprudence, p. 517.
- 100.
Carswell, South Sea Bubble, pp. 73–5.
- 101.
Joslin, ‘London bankers in wartime’.
- 102.
Clapham, Bank of England, p. 237.
- 103.
Wilson, Anglo-Dutch Finance, p. 167.
- 104.
Kindleberger, Manias, p. 123.
- 105.
Schnabel and Shin, ‘Liquidity and Contagion’, Quinn and Roberds, ‘Responding to a Shadow Banking Crisis’, Henderson, ‘The Berlin commercial crisis of 1763’, Neal, Concise history of international finance, pp. 119–24. Short accounts are also given in Wilson, Anglo-Dutch finance, pp. 167–9; and Clapham, Bank of England, I, pp. 236–42.
- 106.
SM XXV (1763), p. 567; Wilson, Anglo-Dutch finance, p. 168.
- 107.
Hoppit, ‘Financial crises’, p. 51.
- 108.
Morning Chronicle, 23 June 1772. For other direct contemporary references to the South Sea Bubble as the archetype for the 1772 events, see London Chronicle, 30 June–2 July 1772; Public Advertiser, 27 January 1773; London Evening Post, 11–13 May 1773. A letter by the Scottish merchant Robert Bogle who (see Chap. 4) unsuccessfully attempted to commit suicide is quoted in Price, France and the Chesapeake, p. 640, where he also comments that ‘In short the South Sea affair was a Trifle to what has now happened’.
- 109.
London Chronicle, 30 June–2 July 1772.
- 110.
Boswell, Reflections, p. 1.
- 111.
Horace Walpole, Letters, Letter 1317, 1 July 1772, pp. 395–6.
- 112.
SM XXXV (1773), p. 443. It is not straightforward to produce statistics of press references for the crisis, as many reports were reiterated on different dates and in different publications, often in heavily edited or otherwise altered form.
- 113.
Price, ‘Fordyce’, DNB as above.
- 114.
Chancellor, Devil take the hindmost p. 119n.
- 115.
Price, ‘Rise of Glasgow’, and Capital and credit, T. M. Devine, ‘Glasgow merchants and the collapse of the tobacco trade’, ‘Sources of capital’, Tobacco Lords, Sheridan, ‘1772 and the American colonies’.
- 116.
Through the so-called Tea Act (13 Geo. III c. 44).
- 117.
Sheridan, ‘1772 and the American colonies’, p. 186, is very careful to stress that ‘a causal relationship [between the crisis and the Revolution] is certainly unprovable’.
- 118.
Evans, ‘Planter indebtedness’, pp. 11–33.
- 119.
Smith, Wealth of Nations, II.ii.73–7.
- 120.
Kerr, History of Banking in Scotland, p. 83, encapsulates the attitude of early academic literature towards the bank: ‘With the exception of the Darien Scheme… there has never been in the history of Scotland so signal an instance of financial mania’. He also does not hesitate in calling the scheme ‘madness’. Nicholson, ‘Scotch banking’, p. 500, similarly accuses the bank of adopting ‘the most reckless methods of lending’.
- 121.
As footnote 18 above.
- 122.
Smith, Correspondence, Letter 132, Adam Smith to William Pulteney, 3 September 1772, p. 163.
- 123.
Glasner, ‘Real Bills doctrine and the Law of Reflux’, Mints, History of Banking Theory, pp. 9–30; Rogers, Law of Bills and Notes, pp. 226–37, Perlman, ‘Paternity of the real bills doctrine’, Santiago-Valiente, ‘Historical background of the classical monetary theory’, Checkland, ‘Adam Smith and the bankers’, Gherity, ‘The evolution of Adam Smith’s theory of banking’.
- 124.
Rockoff, ‘Parallel journeys’.
- 125.
Saville, Bank of Scotland, p. 163.
- 126.
Rockoff, ‘Parallel Journeys’, p. 263. As will be seen in Chap. 5, the Bank did not after all ‘fail’. In any event, if there must be an allusion to the 2007–08 global financial crisis, then it would be rather more appropriate to call the Ayr Bank ‘the Northern Rock of its day’, seeing that its troubles mostly arose from its overdependence on short-term money-market borrowing in the London market, which dried up when Fordyce set off the June 1772 credit crunch.
- 127.
Inquiry on the Late Mercantile Distresses, pp. 6–8.
- 128.
Scott, A Sermon on Bankruptcy.
- 129.
BM Satires 5111, 4471, 5100, 4961, 5016, 5288, among others.
- 130.
This is particularly evident in the reporting of Fordyce’s Continental flight, for example, Public Ledger, 22 August 1772.
- 131.
Preda, ‘In the enchanted grove’ and Information, Knowledge, and Economic Life.
- 132.
Furner and Supple, The State and Economic Policy, pp. 12–26. The categorisation used here has been attributed to Robert Cuff, but it appears to have remained unpublished on its own. It was made with the nineteenth century and public economic policy in mind—in the eighteenth century the boundaries between the three categories are by necessity blurred due to the absence of disciplinary Economics. The author is indebted to Dr David Todd for pointing out this interesting categorisation.
- 133.
- 134.
For the role and influence of the press in this period, see in general Harris, Politics and the Rise of the Press; Black, Press and Politics in the Eighteenth Century and The English Press in the Eighteenth Century; Harris, London Newspapers in the Age of Walpole; Barker, Newspapers, Politics, and English Society; Rae, The English Press in Politics; Sinclair, ‘Periodical literature in the Eighteenth Century’. For the financial world and the dissemination of stock information, see Neal, ‘Rise of a Financial Press’ and Rise of Financial Capitalism, pp. 20–42, and Koudijs, ‘Those who know most’. For satirical prints, see Donald, Age of Caricature, and Colley, Britons, numerous references in passim and specifically the relationship between England and Scotland (pp. 72–86, 114–22).
- 135.
Devine, A Scottish firm in Virginia; Norton Mason, John Norton & Sons; Price, Joshua Johnson’s Letterbook.
- 136.
John Dwyer, ‘Mirror Club (act. 1776–1787)’, Oxford Dictionary of National Biography, DNB: 73612. Sometime in the 1790s Home was appointed one of the principal Clerks of Session, and in 1812 succeeded to the major inheritance of Paxton and Wedderburn, making him one of the biggest landlords in the Scottish Borders. The best outline of his career can be sketched from the archivist description notes on the Home-Robertson papers NAS GD267. A beautiful portrait of him by Henry Raeburn and a classically inspired bust survive in Paxton House near Berwick-upon-Tweed.
- 137.
Several letters of the letters written to Patrick during the crisis while the latter was on his Continental Grand Tour were addressed care of a Florentine banker (NAS GD 267/12/8). The family also had substantial interests in sugar plantations in Grenada.
- 138.
Home retired from actively running the winding-up of the bank in 1793, but he was occasionally drawn upon for advice by his successors. His last letter on the affair dates from 1820, only months before his death in 1821.
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Kosmetatos, P. (2018). ‘A Year of Confusion, Dismay, and Distress’: The 1772–73 Financial Crisis and Its Potential Significance. In: The 1772–73 British Credit Crisis. Palgrave Studies in the History of Finance. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-70908-6_1
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